There’s no free lunch at these seminars

There are thousands of "free lunch" seminars that attract large audiences. In 2007, the Securities and Exchange Commission and the Financial Industry Regulatory Authority scrutinized 110 securities firms that presented free lunch seminars. Their report found that 100 percent of them were sales presentations, despite the fact that the majority were advertised as "educational."

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By Elliot Raphaelson

recordnet.com

By Elliot Raphaelson

Posted Dec. 23, 2012 at 12:01 AM

By Elliot Raphaelson
Posted Dec. 23, 2012 at 12:01 AM

» Social News

There are thousands of "free lunch" seminars that attract large audiences. In 2007, the Securities and Exchange Commission and the Financial Industry Regulatory Authority scrutinized 110 securities firms that presented free lunch seminars. Their report found that 100 percent of them were sales presentations, despite the fact that the majority were advertised as "educational."

The report also indicated that 50 percent of these meetings featured misleading advertising; 23 percent involved possibly unsuitable recommendations; and 13 percent appeared to be fraudulent. If you attend a free lunch seminar and the products offered seems too good to be true, they probably are.

For years, AARP has warned about "veterans' advocates" who in fact are unscrupulous investment advisers interested only in generating commissions for themselves. (See aarp.org/money/scams-fraud/info-03-2012/scam-targets-vets-wa1889.html.) According to AARP, scams targeting veterans are increasing across the country. In many instances, the advisers are not accredited with the U.S. Department of Veterans Affairs. Veterans should never take advice about veterans' benefits from an adviser who is not accredited with the VA.

One scam involves the VA's Aid and Attendance benefit. For certain senior veterans who served during wartime and their spouses, this covers unreimbursed medical expenses and in-home care. In order to qualify, a veteran's assets are considered. While there is no hard and fast limit, generally those with assets of more than $80,000 are excluded. Unscrupulous advisers often make presentations "educating" seniors who are too well off to qualify about how to reposition their assets using an annuity in an irrevocable trust in order to meet the program's threshold. They tell senior vets that their assets will be safe and will pass to their heirs when they die.

The sales pitch is inappropriate because the Aid and Attendance program was not designed to assist wealthy or even moderately wealthy retirees. Moreover, the annuity the advisers often recommend is a long-term investment inappropriate for most seniors, one that introduces serious inflexibility into their portfolios.

Another thing seniors may not realize is that by executing this subterfuge, they will be jeopardizing their chances to qualify for Medicaid if their health deteriorates and they must go to a nursing home. In most states, Medicaid requires applicants to indicate what they have done with their assets over the prior five years. Since an annuity purchase would be categorized as a nonexempt transfer, this would preclude the veteran from qualifying for Medicaid benefits.

Sen. Ron Wyden, D-Ore., has introduced a bill that would enforce a similar three-year lookback period for the Aid and Attendance benefit. This would essentially prevent vets who try the the deferred annuity/irrevocable trust trick from qualifying. If the law is enacted, a vet could end up ineligible for Medicaid and for Aid and Attendance - and have his assets tied up inside in a trust with little flexibility.

The only winner in this scenario is the "adviser" generating a large commission. For example, Neil Granger, a California consultant on investment fraud, reported to AARP that a $500,000 annuity sale could generate a $75,000 commission.

In summary, the Aid and Attendance benefit was not put in place for every veteran who served in wartime. It is a special benefit for those veterans who do not have the financial resources to cover all their medical or in-home health care needs.

If you are a veteran and believe you have been subject to fraud, report it to VeteranFraud@gmail.com. You can also call the VA hot line at (877) 294-6380.

If you are considering any investment because you were told it will provide an additional veteran's benefit, verify it independently with an elder-care attorney.

Contact Elliot Raphaelson, a certified court mediator in Florida with experience in estate planning, at elliotraph@gmail.com.